Recording and Reporting Your Unconditional Promises to Give– May 05, 2016 by Joe DiFranco

A topic we often address with nonprofit organizations during their year-end financial statement audit is how to properly record unconditional “promises to give.” Financial Accounting Standards (FASB) Topic 958, Not-for-Profit Entities gives important criteria nonprofits should revisit each year regarding this area.

The guidance outlines the accounting treatment of contributions received and stipulates that an unconditional promise to give should be recorded as revenue at the time the nonprofit receives notification of the promise. In other words, nonprofits are to record contribution revenue (whether unrestricted, temporarily restricted or permanently restricted) at the time the organization receives the promise of a donation.

Your next question may be, how do I distinguish between an unconditional and conditional promise to give? It can be tricky, but considering the following factors may help:

  • A conditional promise to give means just what it implies. A donation will be made ONLY IF a specific event in the future occurs or a certain condition is met. Conversely, if there is no specific event or condition attached to the contribution, the promise is considered to be unconditional.
  • Award letters or grant agreements that contain fixed payment schedules, or use words such as “promise” or “binding agreement,” are indicative of an unconditional promise to give. These promises should be recorded as contribution revenue if the donor has the financial ability to fulfill the promise and there are no other specified conditions.
  • Award letters or grant agreements that contain explicit matching donation requirements, specific outcomes to first be achieved before the contribution is made, or uses words such as “subject to” or “provided that” are indicative of a conditional promise to give. These promises should not be recorded as contribution revenue until those requirements are met.

Keep in mind that not all unconditional promises to give are unrestricted. Unconditional promises to give can also be temporarily or permanently restricted, as instructed by the donor. Determining unconditional from conditional and unrestricted from restricted are to be determined independently of one another.

Contact Joe DiFranco, CPA, MBA, at or a member of your service team to discuss reporting and recording donor awards and grant agreements.

Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.